Latest Studies

According to this Swiss Re report, the cyclical upswing in the global economy is set to continue in 2018 and 2019, supporting insurance premium volume growth. Global nonlife premiums are forecast to grow by at least 3 percent annually in real terms in the next two years and life premiums by 4 percent. Emerging markets, particularly in Asia, will remain the driver of global nonlife and life premium growth. Major natural catastrophe events in 2017 and current low prices are expected to push pricing in nonlife insurance and reinsurance higher. Some of the hot topics touched upon throughout the report include: the rise of protectionism (U.S.) and compartmentalization (Brexit, Catalonia); 2017 hurricane losses; the flood insurance gap; rising auto insurance claims; Insurtech in China; and international accounting standards. Full Report

This issue of the quarterly briefing on the state of insurtech from Willis Towers Watson focuses on global markets. As one of the largest underdeveloped (re)insurance markets globally, emerging Asia may have the most to gain from an insurtech revolution. In China, the growth and development in e-commerce has created demand for new insurance products that provide coverage for emerging risks associated with e-commerce transactions. Insurers working with e-commerce companies to create new products in response to consumer demand are increasingly leveraging big data technology to determine pricing. For example, the life insurance market in China has moved almost completely to automated underwriting systems with consumers benefitting from the cost savings. The report covers insurtech developments by country and identifies notable cases of insurance industry disruption and the key players. A section covers deal and startup activity by country. Overall, insurtech funding volume was $312 million in Q3 2017, a 68 percent decrease from $985 million in Q2 2017. There were 48 total transactions in Q3 2017, the third-largest number of transactions completed in any quarter to date. International activity is on the rise. The U.S. accounted for 64 percent of transactions since 2012, but only 58 percent in Q3 2017. Full Report

Risk management professionals believe that their board members and executive management take cyberrisk less seriously than they did the prior year, according to this survey from Zurich Insurance and Advisen Ltd. A total of 62 percent of risk professionals said their board of directors view cyberrisk as a significant threat to their organization, down from the 83 percent who said they did so in 2016. Among other survey results, 35 percent of the respondents rated data integrity risks as “high risk,” compared with 22 percent who did so for business continuity risks. In addition, only 53 percent of respondents knew of changes or upgrades made following high-profile attacks in early 2017. The survey also found many organizations are taking a multifaceted approach to their preparation and response strategies by using a combination of internal and external resources. The email survey represents businesses of all sizes, but is slightly weighted toward smaller companies, with 56 percent of respondent companies having revenue of $1 billion or less. Full Report

As society becomes increasingly dependent on information technology (IT) and as innovations in the technology are continually introduced, cyberrisks expand. Three developments are identified as having shaped the struggle to defend against cyberattacks. First is the growing sophistication of global cybercrime, which can now be considered a mature, if illegal, global business sector that is becoming more efficient with each innovation. The number of these attacks has risen sharply, and entire systems have been affected in some cases. Secondly, businesses and entire economic sectors are becoming more and more dependent on IT systems, applications and software. The commercial development of the Internet of Things and artificial intelligence are creating new opportunities for cyberattacks and greater challenges for cyber defense. The third major change is the growing importance of coordination among governments, regulatory authorities, law enforcement agencies, lawyers, auditors, non-government organization, insurers and institutions of all types. This 2018 edition of the MM Cyber Handbook provides an overview of the evolving cyberthreat environment and of new global regulatory approaches and suggests best practices to achieve cyber resiliency. The handbook includes 10 articles on the shifting cyberthreat landscape, six articles on preparing for emerging regulation and six articles on best practices for cyber resiliency. Full report

According to this report, the U.S. crop insurance market has undergone a dramatic structural change in recent years as the industry has responded to profitability challenges. Rebekah Humphrey, an assistant vice president at Conning said, “…margin pressures include changes to the risk sharing economics of multiperil crop insurance with the federal government, continued low commodity prices, and poor performance of private crop insurance products.” The remarkable market participation changes are likely to continue. The study reviews both the multiperil crop and private crop markets. It analyzes the ownership evolution in recent years as well as the current competitive and regulatory landscape and expected future challenges and opportunities for growth. The study is available for purchase from Conning by calling (888) 707-1177, or by visiting www.conningresearch.com. News Release

This study theorizes that flooding from hurricanes will intensify with sea level rise, and what was—in preindustrial times—a once-in-500-year flood may occur once every 5 years by 2030. The researchers used sediment cores from along the New Jersey shore to reconstruct flood events from 850 C.E. to modern times. The sea-level rise projections are based on assumptions of a partial collapse of the Antarctic ice sheet. Models indicate that there will be minimal change in storm surge heights from 2010 to 2100 or 2300, because the predicted strengthening of the strongest storms will be compensated by storm tracks moving offshore at the latitude of New York City. However, projected sea-level rise will cause overall flood heights associated with tropical cyclones in New York City in coming centuries to increase greatly compared with preindustrial or modern flood heights. Full Study

A Rice University and Texas A&M study found that FEMA flood maps missed 75 percent of Houston flood damage claims between 1999 and 2009. The study also found that the maps do not account for times when rivers abandon their paths for new routes during heavy rains, do not accurately account for how waterways in a city will cope with heavy rains, and do not account for variations in individual neighborhoods, making it difficult to predict localized flood events. The research was published in the journal Natural Hazards Review just days before Hurricane/Tropical Storm Harvey inundated the Houston region and caused some of the most catastrophic flooding in U.S. history. Full text

The features of vehicle-based information technology (also called IVIS–In-Vehicle Information Systems) have greatly expanded in recent years, opening a new array of tasks accessible to motorists while driving. Examples include voice commands to send a text message, social media interactions, or surfing the web. However, many of these features can distract motorists from the important task of driving by diverting their eyes from the road, and hands from the steering wheel. Surprisingly, little is known about how these interactions may affect a driver’s performance. Given the potential safety concerns, the AAA’s Foundation for Traffic Safety commissioned a study by the University of Utah to address the new exposures of non-driving tasks. Included in the study were the non-driving tasks of calling, dialing, sending text messages, tuning the radio and programming navigation. Key findings are presented for each non-driving task with associated implications in the form of recommendations for motorists, automakers and other industry leaders. Two of the new exposures (arising out of operating a motor vehicle) include navigation and texting, were analyzed. These were found to be among the most demanding non-driving tasks. The study recommends that motorists program navigation systems prior to driving, and avoid texting while driving. Recommendations for automakers and other industry leaders include blocking both the ability to program navigation and send text messages while the car is in motion. Full report

This report highlights the key objectives and takeaways from the National Highway Traffic Safety Administration’s (NHTSA) expert panel meeting to address the effect marijuana laws have on the DWI and DUID (driving under the influence of alcohol and drugs, respectively) systems. Ten areas of interest affected by the legal sale of marijuana were discussed: Law enforcement; prosecution; court administration, adjudication, treatment, probation and parole; toxicology; data systems; highway safety; and communications. In order to properly identify impaired drivers, the report recommends that officers receive training in Standardized Field Sobriety Testing (SFST), Advanced Roadside Impaired Driving Enforcement (ARIDE), and Drug Evaluation and Classification (DEC). Also noted was that marijuana prosecution takes more time and effort compared to other litigation. Statutes vary in each state, leading to tedious and often case-by-case trials. It is important for prosecutors to understand that testing positive for THC does not necessarily indicate that the suspect was impaired. Toxicologists have limited research and data on drug-impaired driving, and standardization is needed to allow statewide or national comparisons and fill in gaps in data. According to NHTSA’s National Roadside Studies, THC positive driving now exceeds alcohol positive driving. However, the impact of THC on crashes is not clear as fatal crashes have declined in many states, including Colorado and Washington. The expert panel meeting was Phase I of a two-phase project to determine the impact of marijuana legalization on the DWI system. Phase II will be a field study. Full Report

This article investigates the future for the post-Brexit insurance industry, and how insurers and stakeholders can prepare for any potential changes. The U.K. has the third-largest insurance and long-term savings industry in the world. With an expansive role in the world market, there are many key changes and concerns following its decision to leave the EU. The No. 1 issue concerning underwriters is that of access and changing passporting rights. Insurers are hopeful that the U.K. will be able to secure ongoing passporting rights for insurers rather than a country-by-country approval process. Sean McGovern, chief risk officer at Lloyd’s, voiced his worry, saying, “Countries may show less appetite for making agreements with a U.K. population of 63 million customers than they do with an EU of 500 million customers.” Another uncertainty are the costs linked to Brexit and rising concerns on maintaining profitability. As imported goods become more dominant, claims are expected to rise and correspondingly, premiums. The drop in value of the pound sterling is raising costs, however also making a more favorable market for overseas customers. Additionally, job concerns are rising as the U.K. insurance sector is a major employer, with around 300,000 people. According to Cicero Consultants, up to 48,000 jobs could be at risk if insurers chose to relocate in event of Brexit. Amidst these regulatory changes, many pre-Brexit policies are expected to remain, such as compulsory motor insurance and the EU-wide system of healthcare. Full Report